Regarding the relationships of revenues and expenses to assets and liabilities,
ID: 2422406 • Letter: R
Question
Regarding the relationships of revenues and expenses to assets and liabilities, state whether each of the following statements is true or false.
_____ a) Recording an increase in a revenue account may be associated with an increase in assets.
_____ b) Recording an increase in a revenue account may be associated with a decrease in liabilities.
_____ c) An increase in Salaries Expense may be accompanied by a decrease in Salaries Payable.
_____ d) Recording a decrease in assets may be associated with an increase in an expense account.
_____ e) An increase in Supplies may be accompanied by an increase in Supplies Expense.
Explanation / Answer
a) True - increase in sales is revenue increase and cash or a/c recievable increase
b)True - example unearned revenue is a liabiltity which decreases when revenue is recognised
c)False -Salary payable is liability is creation of liability for salary expense incurred
d)True - Prepaid expenses is an asset when the expired portion is decreased the asset (prepaid expense decrease) and expense increase
e) False -
a) True - increase in sales is revenue increase and cash or a/c recievable increase
b)True - example unearned revenue is a liabiltity which decreases when revenue is recognised
c)False -Salary payable is liability is creation of liability for salary expense incurred
d)True - Prepaid expenses is an asset when the expired portion is decreased the asset (prepaid expense decrease) and expense increase
e) False -